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1 (21) 2014

Demography and social economy, 2014, 1(21):97-107
doi: https://doi.org/10.15407/dse2014.01.097

L. Tkachenko
PhD Economics, Leading Researcher of M.V. Ptoukha Institute for Demography and Social Research of the National Academy of Sciences of Ukraine

IMPACT OF DEMOGRAPHIC CHANGES ON THE UKRAINIAN PENSION SYSTEM
Section: Socio-demographic changes in Ukraine: factors and prospects.
Language: Russian
Abstract: The classical theory of demographic transition involves four stages, at the last of which the population number, mortality and fertility rates stabilize, and set constant age structure, i.e. must stop the ageing process. However, the current demographic reality gives grounds to say that the demographic transition consists of not four, but five or six steps. In the final stages fertility is so low, that despite the increase in life expectancy, the number of deaths exceeds the number of births, and the inflow of migrants is not able to compensate for depopulation. Following this demographic transition interpretation, at the final stage the population does not stabilize and continues to decline and the ageing process can progress indefinitely. In this regard, analytical studies are increasingly using the term demographic changes, which does not imply achieving the final point of the demographic transition.
A feature of the demographic development of the post-socialist countries of Europe, including Ukraine, is the rapid pace of ageing on the background of decreasing working age population. In any plausible scenario of demographic development of Ukraine in the long term the level of ageing will grow, and the potential support ratio, which the elderly can count on will decline. By the mid-2050s pensioners will be 3045%, according to the extreme version with a high birth rate and low life expectancy 10% more than the contributors. Direct consequence of ageing is the increase in pension expenditure, not only in absolute monetary units but also in relation to GDP. If the pension system will not undergo any new reforms, the projected growth of pension expenditure may reach, depending on the scenario of demographic development, up to 2131% of GDP in the 2050s (in 2013, according to preliminary data 17.3% of GDP).
An effective solution of the financial sustainability problems of the pension system in the context of rapid ageing is to reexamine the threshold between working and retirement age. The gradual increase in the retirement age for women, which begun in Ukraine in October 2011, helps maintaining the parity between the number of pensioners and contributors and restrain the growth of pension expenditure to GDP ratio for the period up to 2021, but even today it is necessary to adopt a decision on increasing retirement age to 65 for todays young generations.
Key words: demographic transition, demographic change, ageing population, demographic forecast, potential support ratio, old age pensions, pension system.
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